Who Benefits From CBDCs?       

While CBDC boosters may profit from advocacy or working to secure CBDC design contracts with governments, it is governments that are likely to see the lion’s share of potential CBDC benefits.
Even long-time supporters of central banking recognize that CBDCs would offer no unique benefits to the general public. “I keep asking anybody … to explain to me what problem [CBDCs are] solving,” said Neel Kashkari, president of the Federal Reserve Bank of Minneapolis. “And all I get is a bunch of hand-waving.”
As we have explained at length in a new policy paper for the Cato Institute, a libertarian think-tank, CBDC proponents have been quick to list many potential benefits – but these benefits largely fail under any amount of scrutiny.
Consider just one of the arguments: that a CBDC will improve financial inclusion. According to surveys by the Federal Deposit Insurance Corporation (FDIC), people most commonly lack bank accounts because they either do not have enough money to meet minimum requirements, want to preserve their privacy or do not trust banks. A CBDC is unlikely to help with any of these issues.
Let’s start with trust. A CBDC might sound like an attractive alternative for people that don’t trust the banks, but there’s a problem: People don’t trust the government either.
What about privacy? Banks do ask a long list of questions and make customers jump through several hoops. But it would be a mistake to think a CBDC is a solution when much of this information is collected because the government has deputized banks as law enforcement investigators under the 1970 Bank Secrecy Act regime. Although privacy enhancing technology is available, central bankers from the Federal Reserve to the European Central bank have already said anonymity is off the table. In other words, a CBDC may very well be the capstone in the Bank Secrecy Act regime.
That just leaves the minimum balance requirements to consider. Set aside that income levels are a broader economic problem and assume that a CBDC is subsidized so that there are zero minimum requirements and even zero fees. That might fix the cost barrier at first glance, but it brings forth a larger problem that has been looming in the background this whole time: money and finance are not one in the same.
A no-fee CBDC account might let someone holding cash to then convert it in order to transact digitally, but a person is no more integrated into the financial system than if they were simply given a prepaid card. And giving them a prepaid card is something that can be done today. Better yet, it does not require reinventing the money in everyone’s pockets.
It only takes a small amount of scrutiny to see how problems plague other purported use cases. Put simply, CBDCs are ill suited to help financial inclusion, too late to improve payments, unlikely to advance monetary policy and simply no solution for maintaining the dollar’s world reserve currency status.